South Africa will suffer "a complete economic collapse" within four generations if it does nothing to combat the HIV/Aids epidemic, according to new research from the World Bank.

The authors of the World Bank report claim the Aids epidemic could have such a devastating impact on the economy that family incomes could fall by more than a half and middle-income South Africa could become more like a poor African nation.

They argue that the real economic threat from Aids is its potential to kill young adults, which can destroy a country's ability to create human capital.

"As things now stand, the economy could be on the brink of progressive collapse," says the report, which was written by Clive Bell from the World Bank and the University of Heidelberg, Hans Gersbach at Heidelberg and Shanta Devarajan of the World Bank.

"If nothing is done to combat the epidemic, a complete economic collapse will occur within four generations," the report concludes. The World Bank plans to publish the report as a working paper.

These dramatic conclusions will increase pressure on the South African government to launch a much more aggressive programme of Aids treatment in the country, where around 15 per cent of adults are HIV-positive.

Although President Thabo Mbeki has backed away from his controversial suggestion that HIV might not be the cause of Aids, his government is still coming under heavy criticism from international health officials who view its response so far as weak, despite some plaudits for its Aids prevention campaigns.

Many macroeconomic analyses of the Aids epidemic have predicted a relatively modest economic impact with a loss of gross domestic product per capita of 1 per cent a year.

However, the World Bank report argues these analyses ignore the fact that it is young adults who bear the brunt of Aids, unlike most other diseases, which tend to hit children and the elderly.

As a result, the chain of transmission for passing knowledge to the young would be broken and children would be less likely to go to school.

In turn, today's children would have a lower level of education to pass on to their offspring, potentially creating a downward spiral in human capital levels. Spending money now to keep infected parents alive, and on caring for orphans, would have significant economic benefits, they said.

The authors stressed all forecasts in this area were highly speculative but they said if nothing were done, family incomes could fall by more than half by 2050.

Meanwhile, Nelson Mandela, the former president of South Africa, called on Europe and Japan on Monday to give much more money to Aids programmes, especially the UN-sponsored Global Fund for Fighting Aids, Tuberculosis and Malaria.

He praised President George W. Bush for his plan to spend $15bn on Aids over five years and noted France was committed to tripling its global fund contribution.

"It is time for other European countries to substantially increase their contribution to the Global Fund," he said, speaking at an Aids conference in Paris. Europe should at least match, if not exceed, the US contribution. African countries would also watch closely to see that the US followed through with its $15bn pledge.

Without mentioning South Africa, Mr Mandela said African nations had to do "more, much more" to address Aids. He said Uganda, Senegal and Botswana had set an example for the rest of the region.

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